US Investigates Rise in Air Ambulance Crashes
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ITIJITIJ Page 18 Page 20 Page 22 Page 24 International Travel Insurance Journal ISSUE 51 • APRIL 2005 ESSENTIAL READING FOR TRAVEL INSURANCE INDUSTRY PROFESSIONALS AIG’s Greenberg US investigates rise in squeezed out Maurice ‘Hank’ Greenberg, the legendary patriarch of the American insurance industry, has stepped down as CEO of American International Group (AIG), the world’s largest insurer, the company he built from the ground up over 40 years. He remains as non-executive chairman. By Milan air ambulance crashes Korcok A startling upswing in medevac Facing inquisition from the Securities and Exchange accidents and fatalities in the US has Commission (SEC) and New York Attorney General prompted an investigation of the air Eliot Spitzer – who last fall broke open the kickback ambulance industry by the Federal and bid-rigging scandals that rocked the insurance Aviation Administration (FAA) and the industry – Greenberg was eased out by directors National Transportation Safety Board who recognised the need for greater transparency (NTSB). By Milan Korcok in corporate operations and wanted to break free of the autocratic control Greenberg had exerted over After a record 37 deaths in 12 medical the company. helicopter and fixed-wing air ambulance Greenberg’s confrontational manner during the crashes in 2004, followed by seven Spitzer investigations was not accepted gracefully by more deaths of patients, pilots and regulators. Industry analysts said Greenberg should paramedics in the first two months of have taken a more conciliatory, more co-operative 2005, these two federal agencies are tone. He accused Spitzer of damaging the whole scrambling to amass data and formulate insurance industry by his charges. recommendations to rein in the carnage. Greenberg, approaching 80, one of the largest shareholders of AIG, with an estimated 43 million 2005 tally, so far: shares worth close to $3 billion, was known as an • On 5 January, an A-Star 350D medical autocratic taskmaster whose accounting and helicopter based at the North Mississippi operating practices were becoming obsolete and, to Medical Center in Tupelo crashed shortly some regulators, possibly questionable. Regulators after takeoff killing the 58-year-old, now want to talk to Greenberg about transactions veteran pilot. No staff or passengers between AIG and Berkshire Hathaway’s General were on board. The craft was owned by Reinsurance unit executed in the years 2000 to Denver, Colorado-based Air Methods 2001, which, they believe, may have artificially Corp. inflated AIG’s reserves. • On 10 January, the pilot and Though AIG was not a primary target of the Spitzer paramedic on board another Air investigation that hit broker Marsh McLennan Methods Corp. helicopter spun into the Potomac based in Steamboat Springs, Colorado, crashed on • On 21 February, an Air Evac Lifeteam helicopter Companies last October, AIG was served with River and died after dropping off a patient at the way to Rawlins, Wyoming, where it was to pick carrying three crew members and one patient subpoenas for information by the attorney general’s Washington Medical Center. A nurse survived. up a patient for transfer to a hospital in Casper. The crashed in western Arkansas shortly after it lifted off office, as were many other insurers and brokers. • On 11 January, a twin-engine Beech E-90 KingAir pilot and two medical crew were killed. One of the Two of AIG’s executives pleaded guilty to criminal ambulance operated by Mountain Flight Service, crew survived. continued on p.5 fraud charges. Greenberg’s son, Jeffrey, was also spun out as chief executive of Marsh McLennan at the insistence of Spitzer. His other son Evan is chief executive of Bermuda-based Ace Ltd. Both Jeffrey and Evan once worked as executives at AIG but Tsunami insurance losses are modest found their father too irascible to work with and The true cost of the December tsunami disaster is suspected: that the December tsunami disaster was insurance claims from foreign tourists. This is went off on their own. now apparent for insurers, and unlike the wave's not as costly to the insurance industry as it was in relatively light compared to the more serious Martin J. Sullivan, former co-chief operating officer impact on lives in Southeast Asia's coastal regions, human and economic terms. economic loses that could be over US$13.4 billion was immediately installed as new CEO, taking over it could have been a lot worse. By Richard Forsyth The report said ‘insured losses are expected to be (€10 billion), making it the fourth most expensive from Greenberg. Steven J. Bensinger, treasurer and relatively modest’, and losses for the tsunami ‘are disaster last year after October’s Japanese controller, was appointed chief financial officer, London-based risk and reinsurance consultancy Guy expected to be well below those sustained by the earthquake, and hurricanes Charley and Ivan in the taking over for Howard I. Smith. Carpenter & Co. (part of Marsh & McLennan four hurricanes that hit the US in 2004’. US. Frank Zarb, AIG Executive Committee Chairman, Companies, Inc.) has released a report entitled Insured losses are estimated at between US$2.5 In summary, the report explained that the tsunami said: “The board has concluded it is now in the best Tsunami: Indian Ocean Event and Investigation into billion and US$4 billion (€1.9 billion to €3 billion), a affected ‘one of the poorest regions of the world, Potential Global Risks. It has stated what analysts major part of which will come from life and health where most of the properties were uninsured’. continued on p.8 2 NEWS Tsunami update ITIJITIJ Information: the key to tsunami recovery Massive quake kills International Travel Insurance Journal The findings, hundreds in South published in WHAT’S IN mid-March, of East Asia the Post- On the 28 March – just three months after an Tsunami Global earthquake triggered the 26 December tsunami THIS ISSUE? Travel disaster, responsible for killing 300,000 – another giant Intentions tremor devastated South East Asia yet again. The US Research for Geological Survey (USGC) reported a quake the World measuring 8.7 on the Richter scale, shortly followed REGULARS Tourism by a series if other quakes, one of a magnitude 6.7. Organization The damage, although significant, is said to be far less News 1 (WTO) show than the December incident. Grapevine 5 that the “The initial information we're getting is that it is, Editorial comment 6 majority of perhaps, not as serious as first anticipated,” said travellers Michele Lipner with UN Humanitarian Affairs in Banda Insurance matters 7 planning to visit Aceh, Indonesia, soon after the event. Health matters 10 Asia said they However, despite Indonesia’s National Co-ordinating Travel matters 12 would like Agency for Disaster Management and Refugees Air ambulance news 16 more claiming an initial death toll of just over 300, the final Company brief 17 information figure could climb to several thousand. News analysis: Final call for stretchers 18 about the The massive earthquake struck near the coast of World markets: The hills are alive 24 affected areas, mainly relating to health, sanitation per cent of whom said they were now less likely to northern Sumatra, about 125 miles northwest of and the progress of the massive clean-up operation, travel to the Asia region. On the other hand, the Sibolga, and about 880 miles northwest of Jakarta, Hot spots 27 with regards to the impact the waves had on least impact has been on the travel plans of Indonesia’s capital. The tremor was felt in Indonesia, Letters 28 infrastructure and tourist facilities. Canadians (69 per cent said the tsunami had no Malaysia, Singapore and even Bangkok. The fact that it Smile corner 28 The scale of the tsunami and the extensive media impact), the French (65 per cent), Germans (60 per came from the fault line off the coast of Sumatra, Dick’s hotline: Typical hotline cases 28 coverage following the event meant that cent) and Australians (60 per cent). And in some where the December quake erupted, led to a great Service directory 29 international visitors were naturally wary about the countries, such as China, the UK, Canada and deal of speculation. Recruitment 34 state of destinations in Asia, leading ultimately to a Sweden, the tsunami appears to have had a positive “This looks like a fraternal twin of the 26 December Diary dates 34 significant drop in tourist arrival numbers. As a result, impact on people’s travel plans to Asia. Reasons earthquake,” said Kerry Sieh, a professor of geology at On the move 35 the livelihood of many local communities, who are cited for this increased intention to travel were the California Institute of Technology. “It’s not a dependent on tourist revenues, have been kept altruistic sentiments and a willingness to show duplicate. It occurred a little bit further south, a couple Contributors 35 from improving. The tourist authorities in these support for local communities as a way of helping of kilometres further south. But it’s the same type of areas are, therefore, faced with the task of them to recover. These feelings are tempered, earthquake.” FEATURES reconstructing their villages, as well as enhancing however, by the idea that it would be inappropriate The December quake was more intense, however, tourist confidence: two formidable challenges. to holiday while local people were having a tough recorded at magnitude nine. Patrick Leahy, Associate A kick in the Balearics 20 The recent research, conducted by Visa Asia Pacific, time. Director